U.S. partnership ownership,

My_question_is: Applicable to both US and Canada
Subject:        U.S. partnership ownership, living in Canada
Expert:         taxman at centa.com
Date:           Monday April 24, 2006
Time:           09:41 AM -0700
QUESTION:
Hello - Your website is fantasic.  I haven't seen the following situation
covered so would appreciate your thoughts:
- I am Canadian, worked in the U.S. for a few years and have now returned to
Canada.  While in the U.S. I invested in a U.S. partnership; my ownership in
that partnership is less than 1%.  The partnership knows that I am no longer
a U.S. resident.  They have issued me a K-1 showing a capital loss, and some
interest income.  They have also issued me a 1042-S showing income and the
amount of federal tax that has been withheld (15%).
How do I account for this appropriately in my Canadian tax filing.  I assume
for the income I convert it to C$s and declare it and also the amount of
taxes that were withheld at source.  However, it's not clear to me where I
would declare the capital losses, since there weren't any specific buy/sell
transactions that I performed.
Also, I assume that owning such a small portion of this partnership means I
don't have to file a U.S. return - but can't seem to verify that with the
IRS. Is this correct?
Thank you in advance for any help you can provide.
..
----------------------------------------------------
david ingram replies:
Treat the K1 like a T5013 -  Convert the amounts to Canadian Dollars and put
them on the return in the places you would put the same amounts on a T5013.
This means that the capital loss will show up on your Canadian return as
well although it can only be used against a capital gain.  Still the loss
will go in the system and can be used against any capital gain in the
future.
Remember that you have to value all of your assets as you came across the
border into Canada.
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